Panama Papers: Jeremy Corbyn Wants Direct Rule For Tax Havens

28/07/2011_Cayman Islands
Tourists walk on Seven Mile Beach at sunset in George Town, Cayman Islands July 28, 2011. The spotlight has turned on Britain's overseas territories following revelations about the elite's use of tax havens. Gary Hershorn/Reuters

Britain's left-wing opposition leader Jeremy Corbyn has said that the government should consider imposing direct rule on its overseas territories or crown dependencies acting as tax havens.

Speaking in the wake of the so-called "Panama Papers" revelations that have exposed widespread use of offshore tax havens among the global elite, Corbyn told the BBC that David Cameron's government should "say to the governments, those that administer the Cayman Islands, British Virgin Islands, and a number of other places, 'Hang on, you are a government of a British dependent territory, a crown territory.'

"'You must obey UK tax law, you must not become a harbour for tax avoidance and tax evasion.'"

"The point is that they are not independent territories," the Labour Party leader continued, "They are self-governing, yes, but they are British crown dependent territories. Therefore, surely, there has to be an observance of UK tax law in those places.

"If they have become a place for systematic evasion and short-changing the public in this country, then something has to be done about it. Either those governments comply or a next step has to be taken."

Britain is responsible for security and foreign affairs in its 14 overseas territories, a hangover from the vast global empire it once administered, but most have their own elected governments.

Campaigners have said in the wake of the leaks, in which several of these territories are mentioned, that the British government's tough rhetoric on tax evasion and avoidance has been undermined.

Oxfam's Head of UK Policy Richard Pyle said on Monday that "This leak highlights the key role that UK-linked tax havens like the British Virgin Islands play in allowing a privileged elite to dodge paying their fair share of tax."

Labour's international development spokesperson, Diane Abbott, said that Britain's overseas territories are a "relic of empire exploited by [the] rich & powerful for personal financial gain."

The British government has occasionally intervened to enforce laws in its overseas territories in recent years. For three years up to 2012, the government enforced direct rule over the Turks and Caicos Islands until it implemented tax transparency rules, according to the BBC.

But the former Attorney General and Conservative MP Dominic Grieve told the BBC that removing self-governance in these territories would be a "bit of a nuclear option" that could have damaging consequences for local economies.